§ LORD BANBURY OF SOUTHAM had given Notice to ask His Majesty's Government whether the Southwark Borough Council refused to accept the lowest tender for a printing contract on the ground that some of the employees of the firm tendering were not members of a trade union ; whether they accepted a higher tender, thus causing a loss to the ratepayers of £293; whether the district auditor surcharged the Council in this amount, and whether the Government have cancelled the surcharge.
717§ The noble Lord said : My Lords, I believe that I am right in saying that the present Government are strong supporters of Free Trade and that there is nobody who is a stronger supporter of Free Trade than the noble and learned Viscount who sits on the Woolsack. I see that I have not made a mistake in coming to that conclusion. That being so, I should like to draw your Lordships' attention to what occurred in regard to the Southwark Borough Council some few months ago ; as a matter of fact, I think it was about a year and a half ago. At that time the Southwark Borough Council had a Labour majority. They wanted tenders for printing and they obtained a tender from a certain firm amongst others. That firm had nothing against it. There was no reason why the Council should not accept that tender. There was no suggestion that the firm was not in a position to carry out the tender, or that its financial position was not good.
§ But before the Borough Council accepted the tender they asked a further question as to whether the whole of the firm's employees were members of a trade union. I may say, in passing, that there was no question as to whether the firm was paying the trade union rate of wages, but merely as to whether the whole of the men employed by this particular firm were members of a trade union. The firm replied that they had two or three old men who were not members of a trade union. As a consequence, the Borough Council gave the contract to another firm thereby causing a loss to the ratepayers of £293. The district auditor surcharged thirteen members of the Council as having illegally paid this money.
§ The Labour Government came into office, all its members being Free Traders and having gained a very considerable number of votes from that particular fact. The first thing that Mr. Wheatley did was to cancel that surcharge. In another case the excuse advanced by Mr. Wheatley was that he had the power to do it. I appeal to the noble and learned Viscount on the Woolsack, who is a well-known and celebrated lawyer, as to whether the proper course would not have been for Mr. Wheatley to say: "If you think that the district auditor has done anything illegal you must go to a Court of law. There is a Court of law which will decide whether or not your action is illegal." 718 But Mr. Wheatley did not do that. He said that he had some power, I suppose under some administrative act, to cancel the surcharge. Accordingly, he cancelled it. I am, perhaps, rather giving my case away and I do not know what the answer will be, but I believe that he was asked in another place whether he had or had not warned the Borough Council that they must not do this sort of thing again, and I understand that no direct answer was forthcoming.
§ I am sorry that the chief members of the Labour Government in this House have disappeared ; I presume they do not like to face the Question. A Labour Government comes in on the question of Free Trade and the very first thing it does is arbitrarily to protect its friends. A good many members of the present Government are trade unionists, yet, notwithstanding their Free Trade proclivities, the first thing they do is to protect their own class. I always thought that class legislation was the one thing which was attributed to the wicked Tories, and that when we had a Labour Government in power class legislation would be the last thing which would be introduced.
§ But that is not all. One would have thought that what Mr. Wheatley had done was, to use a slang phrase, rather a tall order. But he has done a good deal more and again has gone absolutely contrary to the principles of Free Trade. The Middlesbrough Corporation were making a road and they required to purchase 400 tons of cement. They obtained a tender at 43s. per ton from a foreign firm as against the price of 54s. that was demanded by the British combine ; whereupon that great exponent of Free Trade, a member of the present Government, told the Middlesbrough Corporation that if they persisted in buying in the cheapest market—which I have always understood was the only advantage of Free Trade— he would refuse to give them a Government grant. Here we have an exponent of Free Trade saying : "I will not have a tax upon a foreign industry, upon anything imported from abroad which might bring in something to revenue, but if I find any corporation over whom I have any power buying in the cheapest market, I shall refuse to give them the subsidy 719 which, according to the Act of Parliament, I am bound to give them, unless they buy from a British maker."
§ That is not all, either. Another of the great principles of the Labour Government is to do away with trusts and combines. If manufacturers enter into a trust they fill the Labour Government and also all the Labour Members with horror. Now one of the greatest trusts or combines is the cement trust. I have, unfortunately, to buy cement and I had to buy it at a very high price only a short time ago, because of the combination between all the cement people to keep up the price. Here we have a Free Trade Government not only supporting a combination to keep up the price but actually flying in the face of all their Free Trade principles. I have provided myself with the answers given in another place in case any of my statements should be questioned. I should like to ask the noble and learned Viscount this question. When I first had the honour of sitting in this House, I heard from the Lord President of the Council some most excellent and highly moral sentiments The Lord President of the Council said, in effect—I think I am repeating him correctly—" My Lords, I believe in the Socialist Government. I have become a Socialist because I believe in their principles. If they do anything which Is against their principles I shall be the first to leave that Government." I think that the noble and learned Viscount who sits on the Woolsack got up within a few moments and re-echoed those noble sentiments. His Government have broken some of the principles by which they obtained votes, and I ask him to carry out his noble intentions, to resign his position and retire from the Government.
§ THE LORD CHANCELLORMy Lords, whether or not we are in all respects in agreement with the views of the noble Lord, there is one thing upon which we all agree. We are all happy to see him back again recovered from his illness and able to put his Question. It adds a new interest to the proceedings of this House to have one so vigilant as the noble Lord has proved himself elsewhere to look out for the shortcomings of the Government. The only observation I have to make is that on this occasion he has got hold of a wrong point, and I do 720 not think that he will find that his Question comes to much when he has heard my answer.
It is perfectly true that the Southwark Borough Council refused to accept the lowest tender for a printing contract. They rejected it on these grounds. Some time previously they had passed a resolution that they would employ only trade union labour, and it seemed to them that that was the same thing as insisting on the observance of the standard rate of wages on the part of any one obtaining a contract. What they failed to realise is that a contractor may be paying the standard rate of wages and yet may not be employing members of trade unions. That was the mistake that the Southwark Borough Council made. But it was a mistake that had nothing to do with Free Trade principles, as the noble Lord seems to think. Some of us hold strongly that you must not sweat, that you must not accept the contract which is the lowest in price merely because the contractor can buy labour in a cheaper market than his competitor. We are under an obligation to see that labour is paid the standard wage, and that the workman is not sweated. That is an obligation not only upon the Government, but also upon the local bodies, and I think that every decent employer of labour also takes that view.
What the Southwark Borough Council intended to do was to observe that obligation, but they acted upon the resolution which they had passed a year before, which defined as the mode of ascertaining whether the standard rate was paid, the employment of trade union labour. That was wrong ; it was a mistake on their part; but it was a bona fide mistake, which they entered into with all earnestness and with the best of intentions. When they came to deal with the contract they found that the contractor—an excellent employer of labour, I believe ; I have not a word to say against him—was not employing trade union labour. He was, however, paying the standard rate of wages, but the Council did not know that. Because the firm did not employ trade union labour the Council assumed that they could not be paying the standard rate of wages.
That was a mistake of the Southwark Borough Council. But it was not a case of improperly rejecting the lowest tender, 721 because it would have boon proper on their part to reject the lowest tender if the contractor was not paying the standard rate of wages. In this case the firm sending in the lower tender was, in fact, paying the standard rate of wages, but the Council thought that they should not be given the contract because they did not employ trade union labour. Consequently, they put a wrong interpretation upon their obligation. The auditors surcharged them. Mr. Wheatley did not review the surcharge in any way. He told them that they had been properly surcharged by the auditor and pointed out to them the mistake they had made, but he said : "In dealing with councils and boards of guardians, where they have made a mistake bona fide and not of malice prepense, where they have merely misinterpreted what their duty is—in such circumstances it is not the practice to force members of councils personally to repay the money." That has been the settled practice of previous Governments including those which the noble Lord has himself supported.
§ LORD BANBURY OF SOUTHAMThey may have done wrong.
§ THE LORD CHANCELLORAll Governments do the same thing. The practice has been, when surcharges have been made in respect of small sums, to remit them in the large proportion of cases. But there was a residuum of cases in which the councillors or guardians contended they had done right and refused to pay the surcharges. In those cases the Minister of the day looked into it, and if it turned out that the authority had been acting contumaciously, then the surcharge would not be remitted. For instance, there was a case of the hiring of a band to play outside a prison. That was surcharged, and the surcharge was not remitted. There was also the case of money paid to miners on strike ; those payments were also disallowed on the ground that they had made a blunder.
There are many cases like this, and I can give the noble Lord instances in which remission was granted. There was the case in which proceedings were taken by three councillors whose scats had been wrongfully declared vacant by the council. It was thought that a mistake had been made, and the late Government granted a remission of the surcharge. 722 There was another case in which the guardians granted excessive charges to the returning officer. There again it was thought a mistake had been made, and remission was given. There was another case in which an urban district council overpaid a contractor in respect of wages and materials, and remission was given because it was thought a bona fide mistake had been made. In this case there was no doubt that the Southwark Borough Council made a bona fide mistake; it was not an unnatural mistake for them to make. The Minister was satisfied that they had acted bona fide, and, though he would not enforce the surcharge because he did not think it was wrong, he said he would do exactly what his predecessors in office had done and apply the principle that when a borough council were acting bona fide, under a belief that what they were doing was proper and right, he would not enforce the surcharge. I think I have answered the noble Lord's Question. He said something about Middlesbrough, but he gave me no notice of any such case. I have never heard of it, but if he will give me notice I will do my best to investigate it.
§ LORD CARSONMy Lords. I cannot say that the answer of the noble and learned Viscount is at all satisfactory. I should like to ask him an additional question. What is the admission the noble and learned Viscount has just made ? It is this, that the Southwark Borough Council rejected a Very proper tender at a lower price on the ground that certain persons employed by the contractor tendering were not trade unionists. That is his answer. It does not appear to me to be a very clear enunciation of the methods of safeguarding the liberty of the subject in this country ; nor does it take away from the charge that has been made, that the Lord Chancellor is giving his approval, apparently, to such a tyrannical action on the part of a local body in the spending of public money. Are we to have it laid down that it is the policy of the Government that non-trade unionists should never be employed in matters which involve the expenditure of public money ? That is what has happened in this case, and it seems to me to be one of the most serious objections that could possibly be made against any public body. For any 723 Minister of the Crown to attempt in any way to support what is called a "mistake "on the part of a public body, who have laid that down as their policy, is certainly alarming to those who have any concern with the liberty of the subject in this country. The Lord Chan cellor seems to think that there is some palliation, because, having passed such a resolution as that, the local body, the Borough Council of Southwark, rejected people who were paying trade union wages, because the workers were not trade unionists.
I do not know what we are coming to. Here is a contractor who has two or three old employees who are not trade unionists, but he says he does not like to get rid of these poor old men, and rather than do that he will keep up the standard of wages ; and, although they are not trade unionists, he gives them trade union wages. And because he does that, when he makes a contract for public printing before the Southwark Borough Council his contract is not accepted, although the acceptance of it would save the ratepayers several hundred pounds. Then, when a Labour Minister comes to look into it, he says he has found a justifiable or excusable mistake, a mistake which enables him to wipe out the surcharge which was properly put on the Borough Council by the auditor—I am beginning to doubt whether auditors are of any use at all under the present Government—on the ground that this Borough Council were under the impression that what they were doing was enforcing the payment of trade union wages by passing the resolution that trade unionists must be employed in relation to any contracts entered into by them. A more lame or ridiculous excuse has seldom been offered to any reasonable body of men. The truth of the matter is this, if this is using the public and political power of a Minister to carry out trade union principles to the benefit of those who are its supporters, then it is class legislation of the worst character. If a democracy gets a power of this kind and is able by roundabout ways to make rules which will only enable its friends and supporters to be employed, you are opening the doors to the worst kind of tyranny that can possibly be practised in any democratic country.
724 Like my noble friend who sits below me, I listened to the very Christian sermon, if I may so call it, of the Lord President of the Council upon the first occasion of his speaking from that Bench, and I was greatly affected by much that he said. I remember that he laid down in particular terms that the policy of the present Government was "Peace on earth and goodwill towards men." I fear that we shall rather have to amend that very ancient and Christian saying, and to add to the words "Peace on earth and good will towards men," the words "provided the men are trade unionists and not otherwise." You cannot get away from the facts of this case, and no amount of good humour on the part of the noble and learned Viscount—and I admit that he treats these matters with the most excellent temper and good humour—will get away from hard facts of this kind, unless people are prepared to shut their eyes to the realities of the situation which has arisen when, almost on the acceptance of office, you find the Minister twice, so far as this House, at all events, has heard, remitting these surcharges in order that he may pay a debt and an obligation to those who have been his supporters.
I should like to ask the noble and learned Viscount one question before I sit down. He has spoken of this curious mistake on the part of the Southwark Borough Council, who apparently did not know the difference between employing trade unionists and employing men who were paid trade union rates, and I think the noble and learned Viscount said that they were acting on some previous resolution to that effect. If that is so, I should like to ask whether the Minister who remitted the surcharge took care, before doing so, to see that the Borough Council of Southwark had rescinded and eliminated from their rules this particular resolution under which they professed to act when they were refusing the lowest tender in this case.
§ THE LORD CHANCELLORMy Lords, it is only by your Lordships' permission that I can add anything to what I have already said, but I do ask your Lordships' permission to do so. My noble and learned friend, who is usually so accurate as well as so acute, appears to me not to have listened in the least to what I have said. I suppose he was considering the epigrams that he was going to use in 725 reply, but he has totally misread what I said in answer to the Question. I did not defend the action of the Southwark Borough Council, nor did Mr. Wheatley.
Mr. Wheatley told them that they had been acting illegally and wrongly. He told them that the resolution to which reference was made by the noble Lord was a wrong one, and that they were properly surcharged. When he did not enforce the surcharge he was acting under the powers conferred by the Poor Law Audit Act, 1848, which gives the most complete discretion to the Minister, a discretion which has been used freely by all his predecessors, in eases where there is no doubt that the mistake was made bona fide and that it is fair and equitable that the surcharge should be remitted. The Council were told that they were acting illegally, and all that happened was that they were not made bankrupt or put in prison ; and that was not only within the power of the Minister, under the Act of 1848, but in accordance with the constant practice—
§ LORD BANBURY OF SOUTHAMMay I interrupt the noble and learned Viscount for one moment? I have here the actual words used by Mr. Wheatley in another place on March 5. He was asked this Question—
In what circumstances, and by what authority, he has remitted in August, 1922, against certain members the surcharge made by the district auditor on the last Southwark Borough Council in respect of a printing contract for printing ratebooks, a lower tender being refused because the firm tendering, though paying trade union rate of wages, declined to dismiss one or two employees who had worked for them for many years but did not belong to a trade union ?
MR. WHEATLEYI would refer the hon. Members to the reply given to a similar question by the hon. Member for the Lincoln Division (Mr. A. T. Davies) on the 18th ultimo.
SIR W. DAVISONIs the right hon. gentleman aware that in the reply to which he refers me, he merely stated that he had statutory powers to remit surcharges in cases where he considered it fair and equitable to do so, and does he consider it fair and equitable to withdraw a contract from a firm merely because one or two of its men do not belong to a trade union?
MR. WHEATLEYThe hon. Member's quotation of my reply is not strictly complete. May I complete it? I said that in this case I came to the conclusion that the expenditure was incurred in good faith, though under a mistaken view of the law, 726 and that I did not consider that the circumstances demanded that the councillors who were surcharged should be required personally to make good the amount."
It will be seen that Mr. Wheatley refers to a mistaken view of the law, and not to any resolution of the Borough Council. He was then asked the following question by Sir Kingsley Wood :—
May I ask the right hon. gentleman whether, at the same time as he remitted this surcharge, he informed the board of guardians that he did not propose to do so on another occasion?
§ This was the answer:—
SIR W. DAVISONWill the right hon. gentleman answer my question? Does he think it fair and equitable to deprive a firm of a contract merely because one or two of its men do not belong to a trade union ?
MR. WHEATLEYIf I had not considered it fair and equitable, I would not have made that decision."
There is the answer. Mr. Wheatley considered it fair and equitable, and that is why he made the decision.
§ THE LORD CHANCELLORIt is obvious that that is so, and if the noble Lord will refer to the previous answer, to which Mr. Wheatley referred in the answer which has just been read, he will see the exact position. Mr. Wheatley then stated :—
An appeal was made to my Department against the surcharge referred to, and I found that the surcharge was lawfully made. Under Section 4 of the Poor Law Audit Act, 1848, which is applied to the audit of the accounts of a Metropolitan Borough Council, it is provided that if it is found that a disallowance or surcharge has been lawfully made, but that the subject-matter thereof was incurred under such circumstances as make it fair and equitable that the disallowance or surcharge should be remitted, the Minister of Health may direct that the same shall be remitted. In this case I came to the conclusion that the expenditure was incurred in good faith, though under a mistaken view of the law "—that is the resolution referred to—and I did not consider that the circumstances demanded that the councillors who were surcharged should be required personally to make good the amount. I therefore decided to exercise the power of remission in their favour.That is the whole case.
§ EARL BEAUCHAMPMy Lords, I confess that I intervene with a great deal 727 of reluctance in this most irregular discussion. It is only a short time ago. I think, that a protest was made against questions and answers following one another in your Lordships' House, and I regret to think that in spite of the protest then made by the noble Marquess, the Leader of the Opposition, we should once again have fallen into the custom, and also another practice which is unusual in this House—namely, the reading of long quotations from discussions in another place. A new terror will be added to life if, in future, we should have column-long extracts from the debates in another place read to this House. I hope that it will not be a custom extensively followed in the future.
I do not think that the real question is a very difficult, or a very abstruse one. I join in what has been said by the noble Lord who raised this Question, condemning the stupidity of the mistake made by the Borough Council, but in asserting the principle they did, I think they were not only within their rights but were doing the right thing. Their idea was that they should not give any public money to a firm which was paying less than the trade union rates of wages. It is a well-known principle, and a principle followed not only by Liberal Govern- 728 ments, and no doubt by Labour Governments, but also, I think, by Conservative administrations, not only in the Government but also on local bodies. It is a well-known principle, as no doubt the noble Lord knows.
§ LORD BANBURY OF SOUTHAMBut they were paying—
§ EARL BEAUCHAMPThe noble Lord must know that interruptions are unusual in this House. They were asserting the principle that trade union rates of wages should be paid. It is obvious that they made a mistake in this matter, and we blame them for it, but having come to the conclusion that it was a bona fide mistake, I do not think it would have been fair to insist upon the surcharge. With regard to the question of Middlesbrough which has been referred to, Viscount St. Davids is, I know, anxious to take part in the discussion, and no discussion would be complete without a speech from him. I therefore venture to hope that the noble Lord, if he puts the Question down, will put it down on a date which will be convenient to the noble Viscount, so that he will be able to take part in the discussion.
§ House adjourned at five minutes before seven o'clock.